SVB Financial Group

Last updated

SVB Financial Group
FormerlySilicon Valley Bancshares (1982–2005)
Company type Public
Industry Financial services
FoundedApril 23, 1982;42 years ago (1982-04-23) [1]
Founders
  • Bill Biggerstaff
  • Robert Medearis
Headquarters
New York City [2]
,
United States
Key people
RevenueIncrease2.svg US$7.40 billion (2022)
Decrease2.svg US$1.51 billion (2022)
Total assets Increase2.svg US$211.8 billion (2022)
Total equity Decrease2.svg US$16.0 billion (2022)
Number of employees
8,553 (December 2022)
Subsidiaries
Capital ratio Tier 1 15.4% (2022)
Website SVB Financial Group
Footnotes /references
[3] [4]

SVB Financial Group (SVB or SVBFG) is a financial services holding company headquartered in New York City. [2] The company's main business unit was commercial bank Silicon Valley Bank, until the bank failed in March 2023 after a bank run. [5] [6] The company was a member of the S&P 500 index until March 15, 2023. [7] [8] According to public filings, as of December 31, 2022, SVB Financial Group had 164 subsidiaries. [9]

Contents

Until March 2023, the companies subsidiaries included Silicon Valley Bank and SVB Private, a private banking service affiliated with Silicon Valley Bank that, along with its affiliates SVB Investment Services and SVB Wealth, offered client services especially catered to private equity and high-net-worth individuals. Both Silicon Valley Bank and SVB Private were placed in receivership and sold to First Citizens Bank. [10] [11] SVB Securities was sold to its management in July 2023 and renamed Leerink Partners. [12] SVB Capital was sold in May 2024 to a newly formed entity affiliated with Pinegrove Capital Partners. [13]

History

SVB Financial was founded as Silicon Valley Bancshares on April 23, 1982, [1] by Bill Biggerstaff and Robert Medearis over a poker game. [14] [15] Silicon Valley Bank was incorporated as a wholly-owned subsidiary in October 17, 1983. [1]

In 1988, the company went public via an initial public offering, raising $6 million. [16]

The company's stock price soared through the dot-com bubble but fell 50% when the bubble burst. [17] The company reincorporated as a Delaware corporation in 1999. [3] [18] Ken Wilcox became CEO in 2000 [19]

In 2001, the company's investment banking arm, SVB Securities, expanded its business with a $100 million acquisition of Palo Alto Alliant Partners, which was rebranded SVB Alliant. [20] In 2002, it formally entered the private banking business, building on prior experience and relationships with wealthy venture capitalists and entrepreneurs. [21]

The SVB Private offices in San Jose, formerly operated by Boston Private Bank & Trust Company, on March 13 following Silicon Valley Bank's collapse SVB Private, 60 SOMA, San Jose, California.jpg
The SVB Private offices in San Jose, formerly operated by Boston Private Bank & Trust Company, on March 13 following Silicon Valley Bank's collapse

On May 31, 2005, Silicon Valley Bankshares rebranded as SVB Financial Group, signaling the company's diversification away from commercial banking. [22] SVB Alliant ceased operations in 2007. [23]

In December 2008, SVB Financial received a $235 million investment from the U.S. Treasury through the Troubled Asset Relief Program. [24] The U.S. Treasury received $10 million in dividends from SVB Financial and, in December 2009, the company repurchased the outstanding stock and warrants held by the government, funding this through a stock sale of $300 million. [25]

In 2015, CEO Greg Becker indicated that SVB had yet to make immediate plans to re-enter the investment banking sector as it had before 2006. [26]

In January 2019, SVB Financial acquired Leerink Partners LLC, and renamed the business SVB Leerink. [27] In 2021, SVB acquired Boston Private Financial Holdings and merged its subsidiary Boston Private Bank & Trust Company into Silicon Valley Bank and SVB Private. [28] In 2021, SVB acquired media and telecom research company MoffettNathanson LLC. [29] In February 2022, SVB Leerink was rebranded as SVB Securities. [30]

Collapse of Silicon Valley Bank

In March 2023, Silicon Valley Bank experienced a bank run and collapsed. Then Federal Reserve Board Vice Chair for Supervision Michael Barr reported its customers tried to withdraw 81% of its deposits ($142 billion of a $175 billion total, as of the end of 2022) over two days. [31] The failure of Silicon Valley Bank was the largest of any bank since the 2007–2008 financial crisis by assets, and the second-largest in U.S. history behind that of Washington Mutual. [6] On March 10, 2023, the California Department of Financial Protection and Innovation closed SVB, Santa Clara, and appointed the FDIC as receiver, [5] which transferred all the bank's assets to a newly-established bridge bank. [32] The holding company was not included in the bank closing or resulting receivership. [33] It is no longer affiliated with either Silicon Valley Bank or SVB Private. [10] When the FDIC took over Silicon Valley Bank on March 10, it seized the Santa Clara headquarters shared by the bank and SVB Financial Group; as a result, the holding company moved its headquarters to its offices in New York City. [2]

On March 13, 2023, SVB Financial Group began exploring a potential sale of the bank's sister companies SVB Capital and SVB Securities. The latter's founder, Jeffrey Leerink, expressed interest in buying back the firm. [34] SVB Financial Group filed for Chapter 11 bankruptcy protection on March 17, one week after the bank's failure. [35] A group including Centerbridge Partners, Davidson Kempner Capital Management, and PIMCO reportedly bought a stake in the company in anticipation of the bankruptcy. [10]

On June 18, 2023, SVB Financial Group announced it had agreed to sell SVB Securities in a management buyout, led by Leerink, with funds from the Baupost Group. MoffettNathanson LLC was not included in the sale. [36] [37] In July 2023, the buyout was approved in bankruptcy court, and SVB Securities was renamed to Leerink Partners. [12]

On January 9, 2024, SVB Financial Group announced it planned to turn control of SVB Capital over to a new company controlled by its creditors. [38]

On 20 March, SVB Financial Group announced that it would sell its Indian subsidiary SVB Global Services India to First Citizens BancShares. [39]

On 3 May, SVB Financial Group entered into a definitive agreement to sell its investment platform business, SVB Capital, to a newly formed entity affiliated with Pinegrove Capital Partners and backed by Brookfield Asset Management and Sequoia Heritage. [13]

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References

  1. 1 2 3 Silicon Valley Bancshares (March 19, 1999). "Silicon Valley Bancshares Form 10-K" (PDF). EDGAR . Securities and Exchange Commission. p. 3. Retrieved March 11, 2023.
  2. 1 2 3 Schubarth, Cromwell (March 23, 2023). "Silicon Valley Bank's ex-parent company is no longer based in Silicon Valley". Silicon Valley Business Journal . San Jose, California: American City Business Journals. Retrieved March 24, 2023.
  3. 1 2 "SVB Financial Group 2022 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. February 24, 2023. Archived from the original on March 10, 2023. Retrieved March 10, 2023.
  4. ↑ "Exhibit 21.1-Subsidiaries of SVB Financial Group". U.S. Securities and Exchange Commission. February 24, 2023.
  5. 1 2 "FDIC Creates a Deposit Insurance National Bank of Santa Clara to Protect Insured Depositors of Silicon Valley Bank, Santa Clara, California". www.fdic.gov. Retrieved March 12, 2023.
  6. 1 2 Palumbo, Angela; Vanjani, Karishma; English, Carleton. "Silicon Valley Bank Shut Down, Biggest Bank to Fail Since Financial Crisis". MarketWatch . Archived from the original on March 10, 2023. Retrieved March 10, 2023.
  7. ↑ Assis, Claudia. "Silicon Valley Bank out of S&P 500 index; Insulet selected to replace it". MarketWatch. Archived from the original on March 11, 2023. Retrieved March 11, 2023.
  8. ↑ https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20230310-1461992/1461992_sivb-5.pdf
  9. ↑ SVB Financial Group (February 24, 2023). "Exhibit 21.1-Subsidiaries of SVB Financial Group – SVB Financial Group Annual Report on Form 10-K". EDGAR . U.S. Securities and Exchange Commission . Retrieved March 14, 2021.
  10. 1 2 3 Schubarth, Cromwell (March 17, 2023). "SVB Financial files for bankruptcy protection as it weighs sale of non-bank units". Silicon Valley Business Journal . San Jose, California: American City Business Journals. Retrieved March 17, 2023.
  11. ↑ Britton, Diane (March 27, 2023). "SVB Private Goes to First Citizens, But How Much of It Is Left?". Informa . Retrieved March 28, 2023.
  12. 1 2 Chesto, Jon (July 17, 2023). "How Boston's biggest investment bank was reborn after SVB collapsed" . Boston Globe . Archived from the original on July 17, 2023. Retrieved July 27, 2023.
  13. 1 2 PYMNTS (May 3, 2024). "Pinegrove Capital Partners-Affiliated Entity to Buy SVB Capital". PYMNTS.com. Retrieved May 5, 2024.
  14. ↑ Pollard, Amelia (March 10, 2023). "Silicon Valley Bank Collapses in Biggest Failure Since 2008". Bloomberg Law. Archived from the original on March 10, 2023. Retrieved March 10, 2023.
  15. ↑ "Silicon Valley Bank celebrates 20 years of dedication to entrepreneurs". Svb.com. October 17, 2003. Archived from the original on December 18, 2003. Retrieved June 16, 2020.
  16. ↑ Kokalitcheva, Kia (March 11, 2023). "The rise and stunning fall of Silicon Valley Bank". Axios .
  17. ↑ Popper, Nathaniel (April 1, 2015). "Silicon Valley Bank Strengthens Its Roots" . The New York Times . Archived from the original on April 1, 2020.
  18. ↑ Lacy, Sarah (September 12, 2004). "Silicon Valley Bank extends reach to Bangalore, London". American City Business Journals . Archived from the original on September 27, 2017.
  19. ↑ Calvey, Mark (December 18, 2009). "Silicon Valley Bank's parent to repay all its $235M in TARP money" . American City Business Journals . Archived from the original on September 27, 2017.
  20. ↑ "Silicon Valley Bank to acquire Alliant Partners". American City Business Journals . August 17, 2001. Archived from the original on February 22, 2004.
  21. ↑ Lacy, Sarah (August 17, 2003). "Silicon Valley Bank targeting San Jose for private banking" . American City Business Journals . Archived from the original on September 27, 2017.
  22. ↑ "Silicon Valley Bank Parent Changes Name to Reflect Successful Strategy and Future Growth; SVB Financial Group Becomes Holding Company Name; Debuts on Nasdaq Exchange Today" (Press release). Santa Clara, California: SVB Financial Group. May 31, 2005. Retrieved March 11, 2023.
  23. ↑ "SVB Financial Group Announces it Will Cease Operations at SVB Alliant and Writes Off Remaining Goodwill of Investment Banking Arm" (Press release). Santa Clara, California: SVB Financial Group. July 18, 2007. Retrieved March 18, 2023.
  24. ↑ "SVB Financial Becomes Second Local Bank To Partake In TARP Program". The Mercury News . December 3, 2008. Archived from the original on September 27, 2017. Retrieved November 14, 2012.
  25. ↑ Calvey, Mark (December 18, 2009). "Silicon Valley Bank's parent to repay all its $235M in TARP money". American City Business Journals . Archived from the original on September 27, 2017. Retrieved October 17, 2017.
  26. ↑ Popper, Nathaniel (April 1, 2015). "Silicon Valley Bank Strengthens Its Roots". The New York Times . ISSN   0362-4331 . Retrieved March 12, 2023.
  27. ↑ Group, SVB Financial. "SVB Financial Group Completes Acquisition of Healthcare Investment Bank Leerink Partners" (Press release). PR Newswire. Archived from the original on February 1, 2019. Retrieved January 31, 2019.{{cite press release}}: |last= has generic name (help)
  28. ↑ "SVB Financial Group Completes Acquisition of Boston Private" (Press release). Santa Clara, California: SVB Financial Group. July 1, 2021. Retrieved March 11, 2023.
  29. ↑ Sherman, Alex (December 13, 2021). "Silicon Valley Bank agrees to acquire boutique media and telecom research firm MoffettNathanson". CNBC . Retrieved July 13, 2023.
  30. ↑ "SVB Leerink LLC Announces Company Name Change to SVB Securities LLC". Leerink Partners. February 1, 2022. Retrieved November 7, 2023.
  31. ↑ Son, Hugh (March 28, 2023). "SVB customers tried to withdraw nearly all the bank's deposits over two days, Fed's Barr testifies". CNBC. Retrieved April 10, 2023.
  32. ↑ "FDIC Acts to Protect All Depositors of the former Silicon Valley Bank, Santa Clara, California" (Press release). Washington, D.C.: Federal Deposit Insurance Corporation. March 13, 2023. Retrieved March 13, 2023.
  33. ↑ "Silicon Valley Bank - Santa Clara, California: Frequently Asked Questions". Federal Deposit Insurance Corporation. March 12, 2023. Retrieved March 12, 2023.
  34. ↑ Schubarth, Cromwell (March 13, 2023). "After Silicon Valley Bank's collapse, parent company SVB is looking at selling itself and its other units". Silicon Valley Business Journal . San Jose, California: American City Business Journals. Archived from the original on March 13, 2023. Retrieved March 13, 2023.
  35. ↑ "SVB Financial seeks bankruptcy protection". Reuters. March 17, 2023. Retrieved March 17, 2023.
  36. ↑ "SVB agrees to sell its investment banking division". Reuters . June 18, 2023. Retrieved June 21, 2023.
  37. ↑ Kokalitcheva, Kia (June 18, 2023). "SVB Financial Group agrees to sell investment bank to CEO Jeff Leerink". Axios . Retrieved June 21, 2023.
  38. ↑ Knauth, Dietrich (January 9, 2024). "SVB Financial plans to hand VC business to creditors". Reuters. Retrieved March 31, 2024.
  39. ↑ "Defunct SVB Financial Group to sell Indian subsidiary to First Citizens Bancshares". Reuters. March 20, 2024. Retrieved March 31, 2024.
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